This article explores the similarities and differences between Visa and MasterCard, how they process payments, and their financial performance over the past decade, while also touching on the competitive landscape of the card payment sector.
Business Structure and Market Reach
Visa Inc., headquartered in Foster City, California, was founded in 1958 and went public in 2008. MasterCard Inc., based in Purchase, New York, was established in 1966 and became publicly traded in 2006. Neither Visa nor MasterCard directly issues cards or extends credit; instead, they operate global payment networks that connect banks, merchants, and consumers. Banks issue cards branded by Visa or MasterCard and manage the financial relationships with consumers and businesses.
Both companies operate under a similar four-party model:
- Issuer Bank (the consumer's bank)
- Acquirer Bank (merchant's bank)
- Cardholder
- Merchant
However, Visa is the larger of the two in terms of transaction volume and card circulation. As of 2024:
- Visa has over 4.3 billion cards in circulation worldwide.
- MasterCard has issued approximately 3.1 billion cards globally.
IT Protocols and Payment Processing
Visa and MasterCard both rely on robust, secure global payment networks - VisaNet and MasterCard Network respectively - to facilitate transactions. These systems validate cardholder information, confirm account balances, and authorize transactions within seconds.
Key similarities:
- Both utilize EMV (Europay, MasterCard, and Visa) chip technology for secure in-person transactions.
- They support 3D Secure protocols (Visa’s Verified by Visa, and MasterCard’s SecureCode), designed to authenticate online purchases.
- Both use Tokenization, encrypting card details during digital transactions for added security.
- Both have adopted real-time transaction processing and AI-driven fraud detection systems.
Differences:
- VisaNet is known for slightly faster transaction speeds and greater volume capacity.
- MasterCard’s Single Message System (SMS) is used in some markets for both authorization and clearing in one message, whereas Visa often separates these into two distinct processes.
How They Process Payments
When a customer makes a purchase, the transaction follows a series of steps:
- Authorization: The merchant sends the transaction request through the payment network (Visa or MasterCard) to the issuer bank.
- Authentication & Approval: The issuer bank verifies the transaction against the cardholder’s available balance or credit and either approves or declines it.
- Clearing & Settlement: Once approved, funds are transferred from the issuer to the acquirer, and then to the merchant.
This entire process typically takes seconds but involves sophisticated back-end communications between multiple financial entities.
Stock Performance: A 10-Year Review
Over the last decade, both Visa and MasterCard have outperformed the broader market, making them favorites among investors.
- Visa Inc. (Ticker: V)
- In June 2015, Visa traded around $68 per share.
- By June 2025, the price has risen to approximately $275, reflecting a 300%+ increase, excluding dividends.
- Visa’s market capitalization exceeds $600 billion, making it one of the largest financial companies in the world.
- MasterCard Inc. (Ticker: MA)
- In June 2015, MasterCard was trading near $90 per share.
- As of June 2025, it has climbed to roughly $420, also over a 350% increase.
- MasterCard’s market capitalization stands around $400 billion.
Both companies have benefited from the global shift to digital payments, e-commerce growth, and emerging markets adoption of non-cash transactions.
Other Competitors in the Card Industry
While Visa and MasterCard dominate the global landscape, several other players exist:
- American Express (AmEx): Operates a closed-loop system, issuing its own cards and handling both issuing and acquiring, allowing greater control over customer relationships and data.
- Discover Financial Services: Similar to AmEx in structure, more U.S.-focused, and offers a strong cash-back rewards program.
- China UnionPay: The largest card issuer in China with limited international penetration, though it is expanding in Asia and Africa.
Emerging fintech firms and digital wallets like PayPal, Apple Pay, and Google Pay also present growing competition, particularly in mobile-first economies.
Conclusion
Visa and MasterCard are similar in many ways but differ in network structure, strategic focus, and technological nuances. Both have delivered strong financial performance over the past decade and continue to lead innovation in payment processing. As digital payments evolve and new competitors emerge, these giants must continue investing in cybersecurity, AI, and global partnerships to maintain their positions in the financial ecosystem. Investors and consumers alike will benefit from watching how they adapt in the years ahead.